Saturday, January 9, 2010

How socially responsible are Indian corporates?

Forty nine per cent companies were not doing any Corporate Social Responsibility (CSR) activities

Forty nine per cent companies were not doing any Corporate Social Responsibility (CSR) activities

1,000 Indian companies have been rated for CSR by Karmayog, a group of Mumbai-based citizens, non-profits and corporate houses

CSR activities undertaken by 51 per cent of the companies mainly included education, healthcare and rural development

49 per cent received the lowest score of zero, none scored the highest level

57 per cent of the 40 banking companies scored the highest. Software and paper industries also showed high levels of CSR activities

Entertainment and media, retail, mining, trading and construction industries scored low

63 per cent of the 57 construction companies did not have any CSR activity. Only two of them-DLF and GMR Infrastructure-scored level three

The rating was based on two parameters--steps taken by the companies to reduce negative effects of their products and processes on the environment and the steps taken by them to use their resources and core competence to benefit society


Source: Down to Earth Vol: 18 Issue: 20090531 pp: 1

India ranks 4th in CSR practice

India ranks 4th in CSR practice

India has been named among the top 10 Asian countries that are paying an increasing importance towards corporate social responsibility (CSR) disclosure norms, a survey says.

According to social enterprise CSR Asia’s Asian Sustainability Ranking (ASR), India was ranked fourth in the list, which was topped by Australia.
The other countries in the list include China (second), Hong Kong (third), Japan (fifth), Malaysia (sixth), Pakistan (seventh), Philippines (eighth), Singapore (ninth) and Thailand (tenth).

The 2009 ASR list was dominated by Australian companies, with eight out of the top ten companies analysed coming from there, followed by India, the survey said.
After Australia, the companies in India have the second highest rating for disclosure overall. — PTI

67% companies chose NGOs for CSR implementation

67% companies chose NGOs for CSR implementation

BS Reporter / Chennai January 02, 2010, 0:27 IST

Sixty seven per cent of domestic companies have chosen non-government organisations (NGOs) as partners to undertake their Corporate Social Responsibility (CSR) projects, while 58 per cent prefer government departments for the spread of CSR obligations, Associated Chambers of Commerce and Industry of India (Assocham) says. The chamber, in its assessment, ‘CSR: Quantitative Analysis’, said 21 domestic companies were working with multilateral or bilateral organisations for CSR activities. The study added 37 per cent of the firms had a well-structured foundation for implementing their CSR, while 58 per cent domestic companies had formed a separate department to implement CSR. The importance of building strong public-private partnership as well as working closely with NGOs as implementation partners is being realised by companies, Assocham President Swati Piramal said. The assessment highlights that 21 per cent of companies have come up with a separate CSR report, while only 8 per cent have reported their CSR activities in its annual report. Among international firms, the umber reporting for CSR in its annual reports rate are much higher. In 1977, the figure was 50 per cent, which rose 90 per cent in 2000.

“It was also found that some companies chose to narrow their focus on a few thematic areas, other companies took a broader view and undertook a large scope of areas to focus on. Of the 24 cases analysed, it was found that there were as many as 16 companies focusing on 3-5 thematic areas, whereas four companies catered to 1-2 thematic areas of work and remaining four stuck to six or more thematic areas.”

Monday, January 4, 2010

Should cos get incentives for CSR efforts?

More benefits will spur voluntary Activity

The ministry of corporate affairs, under the leadership of Salman Khurshid, has become proactive on corporate social responsibility (CSR), in addition to its charge on corporate governance. Obviously, the two are different from each other and must not be put in the same basket. Corporate governance involves regulating a corporate that has chosen to list on the stock market and, thus, has major responsibilities towards its shareholders. Therefore, mandatory laws, statutes and accounting norms are invoked to bring transparency and accountability. On the other had, CSR is a voluntary activity by a company, listed or privately-owned, to serve bigger goals of society, beyond its routine market functions. In fact, India Inc is taking several initiatives in the space of CSR for the welfare of society. FICCI, for the last 10 years, has been recognizing industry’s CSR initiatives through an annual CSR award. The question here is whether the voluntary activity of CSR can be spurred through fiscal incentives.

Interestingly, many fiscal measures already exist in our Income-Tax Act. If a corporate donates funds to an approved NGO for social projects, it is eligible for 50% deduction of that amount, and 100% if it funds a not-for-profit organization (registered under Section 25 of the Companies Act). A stellar example of this nature is the creation of the FICCI Aditya Birla Centre for Excellence in CSR, paid for by companies of the Aditya Birla group. Similarly, if a company contributes to an approved scientific research association, it can get up to 125% deduction.

The moot point is: should we have more of such exemptions to attract larger number of corporates into the CSR net? Certainly. We may have to provide weighted deduction of 150% or 125% to motivate enough for encouraging corporates to make such voluntary CSR contributions.

This could possibly be done by inserting a new clause in either section 35(2AA) or section 35(2AB), to provide for 150% deduction of the amount paid to the approved institution/NGOs involved in CSR. With such bold measures to promote CSR, the UPA government will truly live up to its pledge for inclusion of the underprivileged and usher in a new paradigm of private-public partnership (PPP).